Focus)- 08th October 2018

(PRELIMS+MAINS FOCUS)

Centre begins work to widen pension cover under NSAP

Union government taking measures to double the number of people covered by its pension scheme (National Social Assistance Programme) from the current 3.09 crore to more than six crore.

The measure is in line with proposals made in the last budget.

Do you know?

In 2018 Budget, Government had announced higher allocation for Social Security and Protection Programmes.

Government’s estimated schematic budgetary expenditure on health, education and social protection for 2018-19 was Rs 1.38 lakh crore against estimated expenditure of Rs 1.22 lakh crore in BE 2017-18.

Allocation on National Social Assistance Programme (NSAP) for this year had been kept at Rs 9975 crore.

AboutNational Social Assistance Programme

It is a Centrally Sponsored Scheme.

It provides financial assistance to the elderly, widows and persons with disabilities in the form of social pensions.

It is a welfare programme being administered by the Ministry of Rural Development.

However, this programme is being implemented in rural areas as well as urban areas.

Article 41 of the Indian Constitution (Directive Principles of State Policy) directs the State to provide public assistance to its citizens in case of ‘unemployment, old age, sickness and disablement and in other cases of undeserved want within the limit of its economic capacity and development’.

The National Assistance Program consists of five sub-schemes:

Indira Gandhi National Old Age Pension Scheme (IGNOAPS)

Indira Gandhi National Widow Pension Scheme (IGNWPS)

Indira Gandhi National Disability Pension Scheme (IGNDPS)

National Family Benefit Scheme (NFBS)

Annapurna

Drought: govt. asks farmers to go for short duration crops

Part of: Prelims and Mains III – Agriculture and related issues

In news:

Some of the state governments have suggested its farmers to cultivate short duration crops to save themselves against impact of drought.

Due to the drought conditions and deficient rainfall in some states, the farmers have lost four months of kharif season. Hence, long duration crops like paddy, cotton and red gram are not practical.

Even if a farmer goes for long duration variety, the yield cannot be expected. Hence, the push for millets and pulses.

Role of Zeba

As part of drought mitigation measures, the Zeba, a chemical product, is being used to enhancing the moisture retention capacity of soil on a pilot basis in selected districts of the Andhra Pradesh state.

It is being given to the farmers under 100% subsidy during kharif.

The Zeba is expected to help during water-stress periods and overcome the problems caused by deficit rainfall.

First case of ‘Netflix addiction’ at NIMHANS

Part of: Prelims and Mains III – Science and Tech

In news

The Service for Healthy Use of Technology (SHUT) clinic at National Institute of Mental Health and Neurosciences (NIMHANS) in Bengaluru received its first case of Netflix addiction: a 26-year-old unemployed man had turned to the streaming service to shut out reality for more than six months.

While entertainment has always had an element of escapism, streaming services that put up a show’s entire season for viewing on multiple devices, have increased viewers’ susceptibility to binge-watching.

It’s increasingly common for people to spend seven hours at a stretch watching the entire season of their favourite sitcom or thriller.

Whenever his family pressured him to earn a living, or when he saw his friends doing well, he would watch the shows on offer continuously. He could forget about his problems.

While the young man’s case is the most extreme form at the clinic, many other patients being treated for online gaming addictions, are also escaping into streaming platforms.

The counsellors in the schools had noticed that students as young as those in the fourth and fifth standards, were addicted to these shows.

The addiction interferes with the child’s academic performance and counsellors are advising students and parents to keep a close watch on the duration and the shows they watch.

The best advice is to avoid the use of technology if it becomes a coping mechanism.

Upgraded MiG-29 adds to air power

Part of: GS Prelims and Mains III – Security and Defence

In news:

The Indian Air Force’s beast — MiG-29 — has gained in strength and ferocity after an upgrade, giving the force, battling a shortage of fighter aircraft, a much-needed boost.

The Russian-origin aircraft, now capable of effecting mid-air refuelling, is compatible with latest missiles and can launch multi-dimensional attacks.

Even in the previous ‘legacy version’, the aircraft played an important role as the IAF stamped its supremacy over the Pakistani force during the Kargil War of 1999.

With the upgrade, as compared to the previous ‘legacy version’ of the MiG-29 bought under emergency clause in early 1980s, the fighter jets are capable to give a befitting response.

The upgraded MiG-29 has Multi-Functional Display (MFD) screen.

With air-to-air refuelling feature, the upgraded MiG-29 can cover larger distance as compared to the previous aircraft and destroy the enemy.

A flower awaits its place under the sun

Part of: GS Prelims and Mains III – Agriculture, Biomedicine

In news:

For farmers frustrated by the vagaries of monsoon, Tamil Nadu’s State flower, Gloriosa superba is a gold mine waiting to be exploited.

The plant, which contains 24 types of alkaloids (nitrogenous organic compounds) and 10 non-alkaloidal medicinal compounds, is widely used in native medicinal compositions and in the treatment of gout and as a pain killer in allopathic medicine.

Its cultivation, though confined to a few pockets in Tamil Nadu, has started to spread in the recent years.

The story of cultivation of Gloriosa superba

The cultivation of Gloriosa superba by farmers is an interesting story.

P. Rajendran, a farmer from Sivakasi, who stumbled upon a tuber in his farm in 1970, about which he was clueless, sent it to the Tropical Products Institute, London, for analysis.

There it was confirmed that this was a plant whose extract was used by the pharmaceutical industry.

A few months later, he came across a tall plant near Oddanchatram in Dindigul district in the wild.

When an Italian pharmaceutical company offered to buy Gloriosa tuber for ₹250 a kg in 1972, he started to grow the plant under contract farming in several places of Dindigul and the present Tirupur districts.

In 1980, its export was banned as Gloriosa entered the list of endangered species. The same year, export was allowed only for seeds cultivated in farms.

Enthused by the returns, more farmers took to its cultivation. It is now grown in a few thousands of acres in Dindigul and Tirupur districts among others.

The average per acre yield is 100 kg but there are farmers who reap 500 kg of seeds. The price has also gone up from ₹250 a kg 30 years ago to ₹3,430 now.

Challenges and concerns

A major problem in the cultivation of this species is pollination. The peculiar structure of the flower impedes pollination rate.

Rajendran has come up with a novel method to tackle this by resorting to ‘touch pollination’ or manual pollination of implanting pollen grains.

The other problem is the high cost of raising the plant. But the returns are huge as there is no need to plant it again and again.

Tamil Nadu farmers contribute the major share of global consumption of 800 to 1,000 tonnes per annum and the demand goes up by 10 to 15% every year.

Even in the absence of proper marketing facility for Gloriosa, this is the only produce for which the farmer can decide the price.

(MAINS FOCUS)

ECONOMY

TOPIC: General Studies 3

Indian Economy, issues related to growth, mobilization of resources, etc.

Macro economy: Banking, Monetary Policy

Focus on inflation — on RBI interest rate

Introduction

On the basis of an assessment of the current and evolving macroeconomic situation, the Monetory Policy Committee (MPC) has decided to keep the policy rapo rate under the liquidity adjustment facility (LAF) unchanged at 6.5 per cent.

The decision to stand pat comes even as the central bank changed its policy stance from “neutral” to “calibrated tightening”, indicating that rates could either go up or stay steady in the coming months.

Challenges before RBI

It was expected that the RBI would raise rates considering the domestic(rising inflation) and global(raising fuel prices and rupee depreciation) economic scenario.

Bond yields have been on a steady rise since last year as investors have been spooked by fears over the fiscal deficit and the shift in global interest rates.

Going forward, the biggest challenge facing the RBI will be the prospect of further rate hikes by the U.S. Federal Reserve and central banks in other developed economies, which could force the central bank to look beyond its inflation mandate.

Inflation targeting

The RBI has chosen to stick to its primary mandate of keeping domestic inflation just around 4%, notwithstanding other risks facing the economy.

Its dedication to strict inflation-targeting was further reiterated during the press conference after the review meeting where RBI officials termed inflation control as their legal mandate.

With its strict focus on inflation, the challenge now will be whether the RBI can simultaneously manage the various other risks to financial stability.

Effects of RBI decision

The rupee weakened past the 74-mark to the U.S. dollar for the first time ever after the news of the RBI holding rates steady hit the markets.

Stocks, which have been on a downtrend since September, also took a hit on Friday while bond yields fell.

Rationale behind unchanged rates

The RBI’s decision could be termed prudent, particularly after two consecutive increases since June, it can be perceived as a strategy to keep the powder dry just in case external risks get out of hand.

The decision to keep rates steady might also work in favour of the government, which will prefer to borrow at cheaper rates in the run-up to the general elections next year.

The RBI’s decision to not raise rates may lift the sentiments of consumers and businesses at a time when the economy enters the busy season and festival demand kicks in.

The RBI seems to prefer piecemeal measures, such as easing foreign investment norms and mild intervention in the forex market, to address the financial risks posed by the weakening ru

Do you know?

Monetary Policy Framework

The Government of India and Reserve Bank of India signed a Monetary Policy Framework Agreement in 2015.

The objective of monetary policy framework is to primarily maintain price stability, while keeping in mind the objective of growth.

As per the agreement, RBI would set the policy interest rates and would aim to bring inflation below 6 per cent by January 2016 and within 4 per cent with a band of (+/-) 2 per cent for 2016-17 and all subsequent years.

Monetary Policy Committee (MPC):

Monetary Policy is announced by MPC which has been setup based on recommendations of Urjit Patel committee.

MPC consist of six members, 3 from RBI and 3 appointed by the Government.

Members from RBI are governor of RBI, a deputy governor and one officer of RBI.

Members from government are appointed on the recommendations of a search cum selection committee headed by cabinet secretary.

Monetary Policy tools:

Liquidity Adjustment Facility (LAF): The LAF consists of overnight as well as term repo auctions.

The aim of term repo is to help develop the inter-bank term money market, which in turn can set market based benchmarks for pricing of loans and deposits, and hence improve transmission of monetary policy.

Repo Rate: The (fixed) interest rate at which the Reserve Bank provides overnight liquidity to banks against the collateral of government and other approved securities under the liquidity adjustment facility (LAF).

Reverse Repo Rate: The (fixed) interest rate at which the Reserve Bank absorbs liquidity, on an overnight basis, from banks against the collateral of eligible government securities under the LAF.

Marginal Standing Facility (MSF): A facility under which scheduled commercial banks can borrow additional amount of overnight money from the Reserve Bank by dipping into their Statutory Liquidity Ratio (SLR) portfolio up to a limit at a penal rate of interest.

This provides a safety valve against unanticipated liquidity shocks to the banking system.

Conclusion

The unstable global economic scenario and further rate hikes by the U.S. Federal Reserve and central banks in other developed economies are going to affect Indian economy.

The RBI will clearly have to juggle multiple challenges in the coming months.

Connecting the dots:

What is Monetary Policy framework Agreement? Write a short note on Monetary Policy Committee and its functions.

INTERNATIONAL

Effect of policies and politics of developed and developing countries on India’s interests

Oldest friends: India and Russia

Introduction

India-Russia summits have traditionally been short on time and ceremony and big on productivity.

Russian President’s 22-hour visit to Delhi last week was no exception.

Agreements signed during summit

The two countries announced a number of agreements, including a $5.43 billion S-400 Triumf missile system deal, a space cooperation arrangement to put an Indian in space, and an action plan for a new nuclear plant.

Prime Minister Narendra Modi and Mr. Putin also addressed a business summit, in an attempt to diversify ties and increase bilateral trade, currently below $10 billion.

Much of the fresh momentum in bilateral engagement will come from the energy sector.

Though the two sides didn’t announce an agreement between ONGC Videsh and Gazprom as expected, several billions of dollars worth of investment and energy deals are in the pipeline.

The signing of the S-400 air defence system deal, for instance, is of far greater consequence than its size.

It denotes India’s desire to deepen defence cooperation with Russia; also that it is prepared to do this despite U.S. warnings that the deal could attract sanctions.

This deal comes just a month after India signed the Communications Compatibility and Security Agreement (COMCASA) for better interoperability with the U.S. military.

It is a sign that India will not be forced or even persuaded into putting all its eggs in one strategic basket.

Challenges ahead

India’s assertion of “strategic autonomy” and desire for multipolarity will be seriously tested in the coming months.

India chose to sign the S-400 deal, but resisted concluding other major defence deals with Russia on helicopters, stealth frigates and assault rifles, which Moscow will no doubt push for.

More defence deals with Russia will make it increasingly difficult for the U.S. to give India a waiver from sanctions under CAATSA, its legislation aimed at curtailing defence and energy dealings with Russia, Iran and North Korea.

Washington has already reacted to the S-400 deal, making it clear that any waiver will not be on a “country” basis, but on a “transaction-by-transaction” basis.

In any case, accepting a waiver will implicitly commit India to reducing its intake of Russian military hardware.

Way forward

It is one thing to reinforce long-standing and close friendships with the Russia and with the Iran as well as with the U.S. President.

The situation can be much more complex when friends expect you to choose between them.

Both on CAATSA and on the U.S.’s proposed sanctions on Iran that go into force in November, India will need to make some tough decisions.

India needs to stand firm on its deep engagement with Russia in coming months.

Connecting the dots:

Critically examine the Russia-India relations. Considering the global geopolitical instabilities, what are the challenges before India?

(TEST YOUR KNOWLEDGE)

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